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Friday, March 23, 2012

Air pockets ahead for Changi

Mar 22, 2012

CommentaryAirport's future rests on how well regulator and operator fly together

By Karamjit Kaur

CHANGI'S quest to stay at the top of the world airports league is about to hit some air pockets. And just as a smooth touchdown depends on a match of skill and chemistry between the pilot and the control tower, the key to Changi's continued success will be how well Singapore's aviation regulator and the airport operator fly together.

The challenge for Changi is how to keep up with the rise in passenger numbers and expectations.

Earlier this month, the Transport Ministry set up an 11-member working group helmed by Minister of State Josephine Teo to assess Changi's infrastructure and other requirements in the coming decades. Recommendations will be made within a year.

Plans have meanwhile been unveiled to close down the Budget Terminal in September to make way for a newer, bigger facility slated for opening by 2017.

Until then, life is going to get busier at Terminal 2, which will absorb the budget traveller traffic. The terminal which handled 13 million passengers last year will see the traffic swell overnight to about 18 million.

Still, that is not as bad as it might seem. T2 can take up to 23 million passengers a year. In 2007 - the year before T3 opened - it handled 21.5 million passengers.

What this episode does highlight, though, are concerns about Changi's long-term capacity - the focus of the Transport Ministry's working group.

The Centre for Asia-Pacific Aviation (Capa), an industry think-tank, said recently that if Changi continues to grow its traffic by 8 per cent a year - the average since 2004 - the airport will hit full capacity by the time the new terminal opens.

Singapore needs not one but two new terminals by the end of this decade, Capa said, and a third runway as well, to cope with increasing flights.

The team planning Changi's future has a tough job, for two reasons.

One is the sheer logistics. The next phase of Changi's expansion will go beyond the current airport boundary. There is no space for another terminal on existing airport land.

The next big terminal is likely to be erected next to Runway 3, more familiar as the venue for the biennial Singapore Airshow.

If cleared for take-off, the project will be massive and costly. Not only is there a main road - Changi Coast Road - separating the area from existing airport land, Runway 3 is not connected to the other two runways.

Planners will have to find a way to move aircraft, travellers, bags and cargo between the two locations. This is a formidable, but essentially a design, challenge. Options include flyovers as well as underground links.

The second issue, which might call for even more heavy lifting by the Transport Ministry's panel, is how to reconcile the divergence in the interests of the two stakeholders - the Civil Aviation Authority of Singapore (CAAS) and Changi Airport Group (CAG).

In 2009 when CAAS was split into two arms - one to regulate the industry and the other to run the airport - the rationale was to ensure Singapore remained a premier aviation hub.

As a corporate entity, the airport would be more independent and able to react nimbly to increasing competition, the Government said then.

But it would not be focused solely on the bottom line and the assurance to travellers was that the change would not affect the level of service they had come to associate with Changi.

Three years later, aviation insiders say the regulator and the operator do not always see eye to eye.

The ends remain the same - more airlines and flights, and happy travellers - but the means sometimes differ. And this is especially so when it comes to capacity issues.

For more than three decades, Changi's mantra - now that of the CAAS - has been to build ahead of capacity.

When T3 opened in 2008, some travellers described it as a 'ghost town' because it was so empty. Airport retailers were not happy either. Four years later, the terminal is utilising just 57 per cent of its annual passenger handling ability.

Overall, Changi's total traffic takes up 64 per cent of available capacity now.

Travellers don't like crowded terminals. They want room to move around and enough chairs to sit on while waiting for flights.

But even as it is important to please the customer, airport operators are also mindful of the need to ensure the efficient use of assets and resources so they can run viable - and more importantly, profitable - operations.

The question for Changi Airport Group then, is whether it is cost-effective to operate the airport at such low capacity levels, as is the present case, or whether it should pack more people into the terminals.

Other major airport hubs in Hong Kong, South Korea and London reportedly run at more than 80 per cent of total capacity, and are profitable.

The same goes for runways.

Even as calls are being made for Changi to operate a third runway - in line with the 'build ahead of capacity' mentality - an observer with CAG's hat on would point out that while Changi Airport handled 302,000 take-offs and landings last year, Heathrow, which also has two runways, did 476,197.

So instead of rushing to invest in a third runway, perhaps the focus could be on improving efficiency with the current two.

At the end of the day, even if there are some flight delays and terminals become more crowded, would it really hurt Changi's image that much?

The team planning Changi's future will have to tackle the differences between CAAS and CAG when deciding when to build the new terminal and who will pay for it and the related infrastructure works. All these issues will have to be considered carefully, with one eye on the need to ensure the airport's continued success and the other on Changi Airport Group's business interests.

Where the line is drawn will determine the Changi Airport that will greet travellers 10 to 15 years from now.